I'm Political Economy editor at Forbes, editor of RealClearMarkets.com, plus a senior economic advisor to Toreador Research & Trading. I have book on how the economy works, Popular Economics: What LeBron James, the Rolling Stones and Downton Abbey Can Teach You About Economics that is set for release in April of 2015. I have a weekly column on Mondays at Forbes.com.

For De-Friending The U.S., Facebook's Eduardo Saverin Is An American Hero

As is well known now, Facebook co-founder Eduardo Saverin recently renounced his U.S. citizenship. Though no specific reason was given by Saverin for his decision, wise minds could very credibly proclaim him an American hero for doing what he did.

Indeed, Saverin’s U.S. “de-friend” is great for economic growth on its face, and then the political implications of his move will hopefully pay future taxation dividends that accrue to entrepreneurialism and advancement. Media members will vilify Saverin, but hysteria from that quarter is to be expected.

Saverin’s essential maneuver will at first glance hopefully get Americans thinking once again about our wrongheaded system of taxation. As it stands now, Americans, through taxes levied on income and capital gains, are explicitly forced to “prove” their income to the IRS.

Think about the above for a moment. A nation founded on skepticism about politicians and government now has as one of its most powerful institutions a revenue agency meant to badger its citizens about how much they owe a government utterly contemptuous of constitutional limits. To this insatiable beast, Saverin is apparently saying no. Good for him!

Saverin’s flight from the U.S. is yet another reminder of the superiority of a national consumption tax that in a perfect world would be implemented in concert with the abolition of the I.R.S. A limited federal government is a difficult concept to achieve so long as that same government can grant itself the legal right to tax a certain portion of our incomes. When individuals resist governmental hubris, we should exalt their actions.

Ideally Saverin’s situation will remind Americans that the feds work for us, and to ensure that they seek to serve our needs rather than bludgeon us for revenue that they can dole out to favored constituents, we’ll implement a consumption tax through which we can limit what we hand over to them to spend. And if the tax is regressive or hits low incomes at the same percentage as high ones, all the better. Everyone should know intimately the cost of government.

Saverin’s departure is also a reminder to politicians that while they can obnoxiously decree what percentage of our income we’ll hand them in taxes, what they vote for won’t necessarily reflect reality. Indeed, as evidenced by Saverin’s renunciation, tax rates and collection of monies on those rates are two different things. Assuming nosebleed rates of taxation were a driver of Saverin’s decision, politicians will hopefully see that if too greedy about collecting the money of others, they’ll eventually collect nothing.

Considering the capital gains that Saverin will shield from the federal government, this too is heroic. Indeed, we have a bloated, wasteful federal government today precisely because it collects way too much in the way of revenues. Also, deficits that supposedly keep liberals and conservatives up at night are easy to finance at low rates of interest precisely because investors know our Treasury has an endless supply of wealth creators to fleece for dollars.

That Saverin has chosen to avoid supporting the Leviathan is a heroic act that will hopefully make investors a little bit more gun-shy about investing in U.S. debt. And if the loss of Saverin’s millions means fewer government programs will achieve funding, U.S. taxpayers will make up for the Saverin shortfall in spades given the seeming inability of Congress to “sunset” any program. The seen here is what the Treasury will “lose” for Saverin going elsewhere; the unseen the exponentially greater gains that taxpayers will enjoy for Congress not having Saverin’s millions to spend in the first place.

Of course from a near-term economic and investment perspective, what Saverin is doing is stimulus personified. That’s the case because there’s quite simply no realistic way that he’ll be able to spend his looming windfall; one that will come in the form of dollars. And because Saverin won’t be able to spend all that comes his way after the IPO, it means he’ll save that which he doesn’t consume.

To put it simply, unconsumed savings don’t traditionally lie dormant under a mattress, rather the savings are lent to or invested in today’s and tomorrow’s entrepreneurs. In short, Saverin’s avoidance of the tax man means that his Facebook profits will reach future entrepreneurs as opposed to being wasted by the political class.

Oddly here, and this speaks to how silly the economic discussion has become, founder Mark Zuckerberg is being lionized for the presumed $1 billion in capital gains taxes he’ll pay the feds. Saverin’s avoidance plan means more capital for business growth while Zuckerberg’s non-avoidance ensures more feeding of the beast, yet Saverin’s the bad guy? Yes, very odd.

Though it’s small in the big picture, many of us who loath the mere notion of handing money over to the government always pay restaurant tips in cash; the idea there being that wait staff members are better able to hide cash income from the government. It’s a small thing, but ideally multiplied across government skeptics nationwide, it has some kind of impact.

In Saverin’s case, his decision to renounce his U.S. citizenship will have a definite impact, and for that, those of us who seek smaller government should view him as a hero. Saverin’s decision will starve the feds of revenue they would almost certainly waste, it will force a rethink of a tax code that penalizes income and investment success, and the unconsumed dollars kept from the hands of government will reach today’s and tomorrow’s businesses. Let’s raise a glass to Eduardo Saverin. He’s a true American hero.

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Because, as we all know, the only principle in life that matters is the tax rate.

Bon voyage. You’ll follow his example, yes?

Of course, since Singapore is authoritarian, that lovely tax rate might change without your input. But, hey, democratic traditions are meaningless. There will always be somewhere with lower rates to move to. They’ll let you take your money with you. Authoritarian states always do, right?